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Bank of New York For the Benefit of the Asset Backed Certificates v. Verta Tross

April 28, 2011

BANK OF NEW YORK FOR THE BENEFIT OF THE ASSET BACKED CERTIFICATES SERIES 2007-2, PLAINTIFF-RESPONDENT,
v.
VERTA TROSS, DEFENDANT-APPELLANT. AND MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC. AS NOMINEE FOR AMERICA'S WHOLESALE LENDER, DEFENDANT.



On appeal from the Superior Court of New Jersey, Chancery Division, Bergen County, Docket No. F-31902-07.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted March 21, 2011

Before Judges Sabatino and Ostrer.

The trial court denied defendant's motion to vacate a default judgment of foreclosure. On appeal, defendant argues that (1) the judgment is void because there was inadequate service of process; and (2) default judgment should have been vacated under Rule 4:50-1(a) ("excusable neglect") and Rule 4:50-1(f) ("any other reason justifying relief").

We are unpersuaded and affirm.

I.

According to the mortgage note and other record evidence, defendant Verta Tross borrowed $436,000, secured by a mortgage from America's Wholesale Lender with an 8.9 percent rate, to buy a house in Englewood in January 2007. The monthly payment was $3,476.83. She certified that she was laid off and collecting unemployment compensation at the time, but, apparently, she previously had been earning $54,000 a year. Defense counsel represented to the trial court that defendant put no equity into the home. According to the loan documents, she represented that the property would be her principal residence. Along with the $436,000 mortgage, she allegedly executed a second mortgage for $109,000. In argument before the trial court, defense counsel represented, over plaintiff's objection, that the $109,000 was withheld as closing costs. However, the record before us does not include the settlement statement. The second mortgagee was named as a co-defendant in the foreclosure suit.

Defendant defaulted in July 2007. She claimed that she was attempting to reach a work-out with the first mortgagee,*fn1 but there is no documentary proof of that in the record. Bank of New York (BNY) brought a foreclosure action in December 2007. BNY had been assigned the note and mortgage in November 2007, according to the complaint. As we discuss at greater length below, the trial court found that personal service was made at the Englewood residence on defendant's brother, Spencer Tross, on December 8, 2007.

No answer was filed, and default was entered January 17, 2008. Notice of the entry of default was mailed to the residence on January 29, 2008. There was no evidence of its return as undelivered.

A notice to cure was sent certified, return receipt requested, to the Englewood residence in January 2008. Defendant herself signed for it on February 13, 2008. The notice referred to the pending foreclosure suit and warned defendant that plaintiff would seek entry of final judgment if she did not cure. Defendant did not respond.

Plaintiff obtained a default judgment on May 21, 2008 in the amount of $466,414.70, plus interest and fees. The judgment was mailed to defendant at the Englewood residence on June 27, 2008. On September 23, 2008, plaintiff sent defendant, again to the same Englewood address, notice of a Sheriff's sale scheduled for October 10, 2008. It was sent by regular mail, and by certified mail, which was unclaimed. The sale proceeded.

On March 11, 2009, defendant admittedly received notice of eviction, which was scheduled to occur on April 28, 2009. On April 26, 2009, she retained counsel. On April 27, 2009, one day before execution of the writ of eviction, and almost a year-and-a-half after service of the summons and complaint, defendant sought a stay. Judge Koblitz granted the application the same day, staying execution of the writ until May 26, 2009.

On or about May 8, 2009, defendant moved for relief from the default judgment. In support of her motion, she certified to the following facts: she "never received notification of this action" until served on March 11, 2009 with notice of eviction; she did not reside "full-time" at the property because she was staying with her ailing mother; her brother, who "did visit [the mortgaged premises] from time to time," never told her that he received service of the summons and complaint and never showed those documents to her; and her brother "never set up permanent residence" at the home.

Spencer Tross stated in an affidavit dated May 8, 2009 that: he was never personally served with "legal papers"; he never gave the papers to his sister; and he recalled throwing away papers that were tacked to the front door "during the middle part of 2007." Although he did "go by the house . . . from time to time" in mid- and late-2007, and "did visit the property on occasion," he "did not reside at the property full or part-time." As of the date of the affidavit, he claimed to reside at another address in Englewood with his ailing mother.

On May 26, 2009, Judge Koblitz entered an order to show cause presented by defendant with a return date of June 26, 2009. The order compelled BNY to show cause why the court should not vacate the default judgment and cancel the sheriff's sale. Defendant apparently also sought to stay the eviction, but it proceeded nonetheless.

On June 8, 2009, the court heard defendant's emergent request to undo the eviction. Defense counsel represented that Spencer Tross "was now living in the property" and indicated that both he and his sister had belongings and a dog at the property, which were removed during eviction. The court denied plaintiff's motion for emergent relief, which consisted of releasing defendant's property and allowing her to return to the home. Rather, Judge Koblitz compelled BNY to show cause on June 26, 2009 why defendant should not be allowed to return to the home, retrieve belongings, and be granted other relief.

At the ensuing non-testimonial hearing on June 26, 2009, the court confronted defense counsel with the affidavit of service that plaintiff had presented in response to defendant's application. The affidavit stated that service was accomplished at 6:00 p.m. on December 8, 2007 on Spencer Tross, who the affiant stated was a competent member of the household residing there. The affidavit described Mr. Tross as a thirty-year-old black man with black hair, six-foot-two-inches tall, and weighing 170 pounds. The court reasoned that the process server likely obtained that personal information in the course of effectuating service, belying Mr. Tross's denial of service.

[DEFENSE COUNSEL]: He never informed Miss Tross of the matter. He - first of all, Miss Tross was ill at the time, she was diagnosed with a brain tumor. Either he didn't want to disturb her, and also he just thought it was for him, because if he received papers, if he saw ...


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